Kuala Lumpur – ASEAN countries are accelerating efforts to reduce reliance on the US dollar, with initiatives across the region pointing toward a decisive shift in cross-border transaction practices. This trend aligns with the bloc’s broader strategic objective of strengthening financial integration, enhancing payment connectivity, and improving resilience against external volatility.
Private equity investor Ian Yoong Kah Yin typifies this shift in practice. Whether traveling across ASEAN or into China, he now uses QR-based digital wallets to pay in Malaysian ringgit or local currencies — bypassing US dollar conversions altogether. The efficiency, cost savings, and avoidance of double currency conversion are clear benefits that support the regional move toward local currency settlement.
Yoong’s approach reflects a growing consensus among ASEAN policymakers and businesses. At the 46th ASEAN Summit in Kuala Lumpur, regional leaders endorsed the ASEAN Economic Community Strategic Plan 2026–2030, which prioritizes regional payment connectivity and local currency transactions. The plan comes amid continued geopolitical tension and currency instability, both of which have eroded confidence in the US dollar.
A key enabler of this transition has been the Cross-border Interbank Payment System (CIPS), China’s yuan-based alternative to SWIFT. Around 100 ASEAN banks are now part of CIPS, further easing the use of the renminbi in cross-border trade.
The results are already tangible. According to data cited by Nawazish Mirza, Professor of Finance at Excelia Business School, over 25 percent of intra-ASEAN trade in 2024 was settled in local currencies — up from less than 10 percent in 2019. Bilateral currency swap lines and digital payment infrastructure are now helping to institutionalize this practice.
Several ASEAN states — including Indonesia, Malaysia, and Thailand — have signed direct bilateral currency swap agreements with the People’s Bank of China, while QR code-based cross-border payment systems continue to expand. Singapore and Thailand established interoperability in 2021, and Indonesia joined through a pilot in 2022. These systems are enhancing both B2B and retail transactions by reducing settlement times and cost overheads.
Joanne Lin Weiling of the ASEAN Studies Center at ISEAS-Yusof Ishak Institute noted that interoperable QR systems are not just technologically efficient but inclusive. “As long as citizens have smartphones and linked bank accounts, they can participate,” she said.
Ying Jian, principal strategist at Bank of China’s Hong Kong Financial Research Institute, reported that in 2023, renminbi-based trade settlements between ASEAN and China exceeded 2 trillion yuan — accounting for over 30 percent of bilateral trade.
Bangkok Bank, the first Thai bank approved as a direct CIPS participant, sees this as a critical enabler of faster, direct renminbi transactions, improving efficiency for corporates involved in China-ASEAN trade.
While the US dollar still dominates global invoicing, ASEAN’s steady steps toward de-dollarisation show a strong regional commitment to financial diversification and stability. Mirza notes, “The speed of this transition will depend on market confidence, liquidity, and how quickly alternative currencies scale.”
In the medium term, ASEAN’s coordinated strategy — blending infrastructure, policy, and innovation — positions the region as a proactive force in reshaping cross-border finance. For regional corporates, financial institutions, and investors, the shift presents opportunities to realign currency exposure, reduce overheads, and engage more deeply in an increasingly integrated economic bloc.
